GBP Exchange Rates 19th March

By Tom Higham

19th March, 2014

UK Unemployment and Bank of England Minutes – GBP Exchange Rates

This morning the latest UK unemployment figures have been released and it has shown that the levels have fallen by 63,000 but that was not enough to bring the percentage down from 7.2% which is still not quite at the 7% mark. In the lead up to this the markets were very volatile as the anticipation was unemployment may fall further but as this hasn’t happened the rates have held quite steady again although they are slighthly up from the start of trading today. The Bank of England (BoE) minutes were also announced this morning and they have shown, as expected, that the vote was 9-0 in favour of keeping both Quantitaitve Easing and interest rates on hold which has done little to support Sterling. However, while the boost to Sterling exchange rates has not yet happened there is still hope that today could be a busy day on the markets with the budget due for release at lunch time today. I would not be surprised to see Chancellor George Osborne announce that the UK recovery is very much on track and he may even upgrade our growth forecast and if he does then we may see Sterling exchange rates strengthen. I believe that a positive budget could push GBP exchange rates back up towards the 1.20 level , however if the budget is not taken well then it could lead to Sterling weakness, so for anyone looking to make an international currency transfer today’s budget could be key and worth monitoring closely.

USD Exchange Rates

Finally, this afternoon we have the latest Federal Reserve Bank of America’s (Fed) interest rate decision which is expected to see rates remain on hold while talk of tapering is likely to be a key point for the USD. Should tapering continue at the same rate ($10 billion a month) then it will continue to have a wide ranging impact on not just GBP USD exchange rates but also other currencies including the AUD, NZD and the CAD all of which have been volatile while the US tapering has taken hold. The concern for many economies is that with less money being pumped into the US economy it means they will spend less and as a result damage the amount of money moving through other economies. Should the Fed decide to increase the amount they taper by we could see some very big movements on the market although there is no expectation that this will happen, however we have come to learnt in the currency markets to expect the unexpected!

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